By: Jessica Duncan
Last week American Banker hosted their virtual edition of Card Forum 2021. During the two and a half days of panel discussions, industry experts shared the lessons learned over the past 18 months, what major trends will continue in the payments space, and where the future of payments is headed.
1) Digital Engagement is Here to Stay
This statement is true in payments but also overall consumer behavior. The pandemic expedited the shift to digital and many consumers were forced to work through their own trepidations or learning curves in order to adapt to digital ways of engagement. Now, on the other side of that experience consumers have a new set of learned behaviors and real-life understanding of the benefits or conveniences that can be offered online or in-app, like online grocery delivery, remote deposit capture, or making a card payment through the mobile app. During the Forum, many spoke to the pandemic’s silver lining which was laser-sharp focus at the organizational-level to ensure they were offering the same level of service to their customers and the ability to solve problems for them virtually. This allowed clear direction and concentrated efforts on improving digital capabilities while also having an acute sensitivity to the customer’s experience since some of the traditional channels were not there to catch those that needed further assistance. This helped move digital solutions forward at a time when their customers needed them the most. The strategic focus on improving digital functionalities is not over and will continue to be the path forward. Upcoming efforts to roll out new mobile app functionality and digital solutions like virtual cards, instant issuance, or improved chat bots, will likely be met with more willingness to try as consumers have a new found confidence with digital experiences.
2) Flexibility – A Growing Expectation
Flexibility came in all shapes and sizes during the pandemic. Notably, for credit cards that included actions like skip-a-pay offers, fee modifications, and extended timeframes to qualify for certain benefits. Though much of the pandemic-specific assistance has subsided and special accommodations are trailing off, organizations are aware that they must continue to be conscious of consumer’s expectations and the lasting-impression these acts have made. Flexibility has become an integral part in building brand loyalty and product allegiance. Those in the industry expressed their commitment to offering flexible solutions that provide options and allow cardholders to control certain aspects of the decisioning. Some of the more common examples include select your payment date or select your rewards category. More recent examples bring a new level of ownership to the cardholder, like flexible redemption options, installment payment plans, or even the interesting introductory offer for the newly launched Wells Fargo Reflect Card. This is a critical area of focus as consumers have more payment options than ever before, and a resounding theme of “control” came up in the discussions around what currently appeals to consumers.
3) Frictionless & Seamless Payment Experiences
During a keynote discussion, Barry Baird the Head of Payments at TD Bank, made a very assimilable comparison to an Uber ride when conveying what the future payment experience will look like. He stated that payments are no longer a “standalone exercise or distinct stop point or moment in the customer experience.” Just like an Uber ride in which you exit the car without having to pause and initiate a payment for your transaction, this frictionless experience will continue to emerge more broadly across the payments industry through further advancements in integrated payment experiences or “embedded finance” transactions. Digital wallets are a prime example of a product solution that is aimed at removing transactional barriers for the consumer, thus building stronger patronage. However, larger initiatives are also emerging like Chase’s announcement of their acquisition of Volkswagen’s payment software. This is an exciting and ambitious effort to watch as Chase looks to take on and advance in-car digital transactions in the United States.
4) Dynamic Rewards & Hyper-Personalization
Meaningful matters most when it comes to credit card rewards programs and product design. We have seen this theme unfold with recent product launches like the Citi Custom Cash Card and their tagline of “Rewarding You for Being You.” Relevancy is the linchpin in today’s competitive rewards landscape, and we can expect to see issuers looking for new ways to provide dynamic and personalized options with their products, both consumer and business. Courtney Gentleman, SVP and Chief Marketing Officer of Payments for Synchrony, proudly spoke of the hyper-personalization they were able to offer through the Venmo Card. The tiered rewards program automatically adjusts each cycle to the top categories of spend, cardholders can choose their plastic design, and the most innovative feature includes a unique QR code on the front of the plastic for seamless access into the Venmo App to pay someone or receive payment.
5) No Magic 8-Ball Prediction on the Impact of Buy Now Pay Later
Did you think we could talk about the payments industry and not bring up Buy Now Pay Later? Of course, not! Buy Now Pay Later continues to dominate headlines and was a key area of interest during the Forum. In each panel’s Q&A submission box attendees, including myself, were curious to hear the experts’ opinions on Buy Now Pay Later. Unfortunately, there isn’t a magic answer to predict how Buy Now Pay Later may impact credit card volume or the payment space in general. However, many agreed that it’s easy to understand the attraction. Buy Now Pay Later is an option that offers convenience, control, and a seamless experience. It’s also a concept that is not new with buying something today with money that will be made tomorrow. This solution was packaged in a relevant way at an ideal time. Due to the fast adoption, we learned quickly that Buy Now Pay Later is not a fad and will play a part in the evolution of payments. Research is showing strong adoption from Gen Z but also from high revolvers. For these reasons, most in payments are playing close attention and analyzing where this offering will fit in the landscape long term or how they too can find their spot in the Buy Now Pay Later experience. Looking back through the key takeaways outlined in this article, Buy Now Pay Later has been able to have its massive movement because it could easily fit under each of the key themes – digital engagement, flexibility, seamless experience, and dynamic term options that fit their needs.
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